Networking for Angels

One way to attract private investors to your company is to find them through a "matchmaking" service. Such services exist at universities and among local economic-development groups across the United States.

How is a matchmaking group different from an investment banker or broker?
Matchmaking groups are information services. They tell prospective investors about business deals that fit their parameters, tell business owners about potential investors, and make introductions when appropriate. They don't take a percentage of any deals that get consummated, and they don't perform due diligence on either party. Their fees are also lower: $450 for a six-month listing for companies seeking capital and private investors; $950 for a venture-capital or corporate investor.

What kind of investors get listed in matchmaking databases?
Most are "angels," including successful entrepreneurs, lawyers, accountants, and wealthy individuals. But such databases also list venture capitalists and corporations seeking strategic alliances.

What type of entrepreneurial situations are right? Or wrong?
Investors typically want a payoff of three to five times their investment in three to five years. If a company doesn't offer that growth potential, it's not right for this financing market. That's also true if the owner is looking for passive, rather than active, investors.


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